Is it time to declare your financial independence?

No matter how much money you have or which life stage you’re in,
becoming financially independent starts with a dream. Your dream might be to
finally pay off the mountain of debt you’ve accumulated, or to stop relying on
someone else for financial support. Or perhaps your dream is to retire early so
you can spend more time with your family, travel the world, or open your own
business. Financial independence, however you define it, is freedom from the
financial obstacles that are keeping you from living life on your own terms.

Envision the future

If you were to become financially independent, what would
change? Would you spend your time differently? Live in another place? What
would you own? Would you work part-time? Ultimately, you want to define how you
choose to live your life. It’s your dream, so there’s no wrong answer.

Work at it

Unless you’re already wealthy, you may have had moments when
winning the lottery seemed like the only way to become financially secure. But
your path to financial independence isn’t likely to start at your local
convenience store’s lottery counter.

Though there are many ways to become financially independent,
most of them require hard work. And retaining wealth isn’t necessarily easy,
because wealth may not last if spending isn’t kept in check. As income rises,
lifestyle inflation is a real concern. Becoming – and remaining – financially
independent requires diligently balancing earning, spending, and saving.

Earn more, spend wisely, and save aggressively

Earn more. The bigger the gap between your
income and expenses, the quicker it will be to become financially independent,
no matter what your goal is. The more you can earn, the more you can
potentially save. This might mean finding a job with a higher salary, working
an extra job, or working part-time in retirement. And a job is just one source
of income. If you’re resourceful and able to put in extra hours, you may also
be able to generate regular income in other ways – for example, renting out a
garage apartment or starting a side business.

Spend wisely. Look for opportunities to reduce
your spending without affecting your quality of life. For the biggest impact,
focus on reducing your largest expenses – for example, housing, food, and
transportation. Practicing mindful spending can also help you free up more
money to save. Before you buy something nonessential, think about how important
it is to you and what value it brings to your life so that you don’t end up
with a garage or attic filled with regrettable purchases.

Save aggressively. Set a wealth accumulation goal
and then prioritize saving. Of course, if you have a substantial amount of
debt, saving may be somewhat curtailed until that debt is paid off. Take simple
steps such as choosing investments that match your goals and time frame, and
paying yourself first by automatically investing as much as possible in a
retirement savings plan. Time is an important ally in the quest for financial
independence, so start saving as early as possible and build your nest egg over
time. (Note that all investing involves risk, including the possible loss of
principal, and there is no guarantee that any investment strategy will be
successful.)

Keep going

Make adjustments. Life changes. Unexpected bills come up. Some years will be tougher financially than others. Expect to make some adjustments to your plan along the way, especially if you have a long-term time frame, but keep going.

Track your progress. Celebrate both small milestones and big victories. Seeing the progress you’re making will help you stay motivated as you pursue your dream of financial independence.

A Registered Investment Adviser with the Securities and Exchange Commission and the Securities Division of the State of Washington. Miller Advisors offers Wealth Management, Personal Finance and Retirement Planning Services.